What are Various FIIs Views of Indian Equity in 2015-16 ?

May 29, 2015

There is no doubt that India is in a Structural Multi Year Bull Run. One should not be too much worried about Bull Market Corrections as we have seen it happen 22 times at 10% in the last 10 years. In this backdrop, we’d like to summarize the views of various Foreign Investors who now own 25% of Indian Equity Market while Indians poured all their money in non-productive assets such as Gold & Real Estate.

BOFA Merrill remain positive on the Indian markets over next 6 to 9 months and expect an up-turn in consumption over the next 6 months on account of (a) lending rate cuts, (b) implementation of 7th pay commission, and (c) MSP hikes in line with Swaminathan formula. Continuity in reforms would drive the markets in the second half of the year and they continue to maintain year end BSE Sensex Index target of 33,000.

Mover & Shaker of Indian and Asian Equity Morgan Stanley Research said that BSE Sensex will continue to deliver annual returns of 14% over the next 10 years, based on our residual income model without assigning any near term target.

Maybank KE Research has the following view,

We believe the recent 10% correction in the NIFTY is an entry point and maintain our NIFTY target of 9,520 (+14%) based on one-year forward PER of 15x. Near-term earnings improvement seems less exciting. However, there is growing evidence of firm recovery in 2HFY16. Soft commodity prices, cut in interest rates and major policy actions lifting investment and consumer sentiment support our view.

Japanese lead Foreign Investor and Partner with LIC in Mutual Fund, Nomura said,

Strategy-wise, we remain bullish on the market and maintain our Dec-end Sensex target of 33,500, especially after the fall from 3 March peak of 10% for the market, 11% for Bankex and 14% for capital goods index, which has incrementally priced in market concerns of an extended slowdown

HSBC is somewhat conservative and said

We remain constructive on India (OW within Asia, with a Sensex target of 30,100 for end-2015); in our view, this correction creates opportunities in our coverage universe.

Out View We Continue to Remain OVERWEIGHT on Indian Equity and would stick to Investing on the basis of Fundamentals of Earnings of Companies to earn Higher Tax Free Long Term Yields beating Real Estate and Gold.